Correlation Between Nabors Industries and Xponential Fitness

Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Xponential Fitness at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nabors Industries and Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nabors Industries and Xponential Fitness, you can compare the effects of market volatilities on Nabors Industries and Xponential Fitness and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nabors Industries with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Xponential Fitness.

Diversification Opportunities for Nabors Industries and Xponential Fitness

0.1

Correlation Coefficient

Nabors Industries  Xponential Fitness

Average diversification

The 3 months correlation between Nabors and Xponential is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Nabors Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nabors Industries are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Nabors Industries i.e., Nabors Industries and Xponential Fitness go up and down completely randomly.

Pair Corralation between Nabors Industries and Xponential Fitness

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Xponential Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Nabors Industries is 1.08 times less risky than Xponential Fitness. The stock trades about -0.29 of its potential returns per unit of risk. The Xponential Fitness is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,549  in Xponential Fitness on December 4, 2024 and sell it today you would lose (166.00) from holding Xponential Fitness or give up 10.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nabors Industries  vs.  Xponential Fitness

Nabors Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nabors Industries and Xponential Fitness

The main advantage of trading using opposite Nabors Industries and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Xponential Fitness can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.

The idea behind Nabors Industries and Xponential Fitness pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.